Americans Paid 14% More for Financial Services in 2022, Spending Nearly $350 Billion on Interest and Fees
A new report from the Financial Health Network found that Americans paid 14 percent more for financial services in 2022 due to increased interest rates on loans, higher borrowing levels, and rising fees on deposit accounts. Consumers spent $347 billion on interest and fees last year, which was up from $304 billion in 2021.
“Altogether, this paints a picture of debt that could really start to strain the checkbooks of American families,” said Meghan Greene, Financial Health Network’s senior director of policy and research, according to American Banker. “Toward the end of 2022, there were a number of signs that defaults were starting to grow, so that gives us a worrisome picture of how much debt people are carrying.”
Consumer credit quality was strong from 2020 through part of 2022 due to pandemic-related relief like government stimulus payments and lenient payment due dates. But the report found that total fees and interest on credit cards rose 20 percent from 2021 at $113.1 billion last year, due mostly to elevated card balances and higher interest rates.
The signs of diminishing consumer credit are prevalent this year too, as delinquencies on auto loans and credit cards have recently reached and surpassed their pre-pandemic levels. Americans are no longer paying off debts quickly like they were during the pandemic; both of these trends signal that consumers are losing the financial cushion that they’ve had for the last several years.
Consumers are also using their credit cards at the fastest year-over-year pace recorded. At the end of March, credit card balances totaled $1 trillion, a 17 percent increase from the year before. Additionally, 11 out of 13 credit and loan products showed increases in interest and fees in 2022.
Americans paid 4 percent more in 2022 on services related to deposits and transactions, despite a decline in overdraft-related fees. The largest increases were account maintenance fees, which climbed by 16 percent, and charges for international remittances, which rose by 10 percent.
